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Information Infrastructure Advisory Committee
Licensing Of Local Fixed Telecommunication Network Services By Wireless Transmission, ExternalFixed Telecommunication Network Services And The Hong Kong Cable Television Limited To Provide Telecommunications Services
Purpose
This paper briefs Members of the recent licensing decisions by the Telecommunications Authority (TA) in respect of local fixed wireless Fixed Telecommunications Network Services (FTNS) licences, satellite-based and cable-based external FTNS licences, and the FTNS licence for the Hong Kong Cable Television Limited (HKCTV) to provide telecommunications services over its network.
Background
2.On 5 May 1999, the Government announced its policy decisions on the issues arising from the 1998 Review of Fixed Telecommunications to further liberalise the local and external telecommunications facilities market. The Government would issue licences -
(a)for the provision of fixed telecommunication services using non-wireline-based networks;
(b)for the operation with effect from 1 January 2000 of non-cable-based external telecommunications facilities;
(c)for the operation with effect from 1 January 2000 for operation of external telecommunications facilities based on submarine or land cables only to those who would invest directly in bringing new physical cables to Hong Kong; and
(d)to permit, with immediate effect, Hong Kong Cable Television Limited (HKCTV) to offer telecommunications services using cable modem technology over its hybrid fibre coaxial cable (HFC) network, subject to the company making binding commitments on the rollout of its cable network and the return of its Microwave Multipoint Distribution System (MMDS) frequencies on an agreed schedule.
3.By the closing date of 30 September 1999, the TA received a total of 14 proposals for local wireless FTNS licences, 20 proposals for external satellite-based FTNS licences and 14 proposals for external cable-based FTNS licences. The response of the market has exceeded our expectations.
4.TwoWorking Groups, comprising members from the Office of the Telecommunications Authority (OFTA) and the Information Technology and Broadcasting Bureau (ITBB), with the Independent Commission Against Corruption as an observer, were formed to assess the applications received for the local fixed wireless FTNS licences and external FTNS licences and to make recommendations to the TA. The applications, together with other supplementary information provided by the applicants, were carefully evaluated against the respective sets of criteria laid down in the Guidance Notes for the invitation of proposals, as set out in Annex A for local fixed wireless FTNS licences and Annex B for external FTNS licences. The TA has accepted the recommendations put forward by the Working Groups on the selection and other licensing considerations.
5.HKCTV also submitted on 30 September 1999 an application for the provision of telecommunications services over its HFC network. The application from HKCTV was evaluated by OFTA, for recommendation to the TA, against the criteria laid down in the Guidance Note to HKCTV, as set out in Annex C.
Licensing Decisions
6.We announced on 18 January and 1 February 2000 of the licensing decisions of the TA as follows :
(a)Five licences were offered for the operation of the local fixed wireless networks. The new services can be made available to customers within the radio coverage (about 1-2 km radius) of hub sites,covering both residential and commercial buildings. The successful applicants have pledged to provide services within 4 to 16 months upon issue of the licence. Their total investment would reach HK$2.8 billion in the first three years of their licence period;
(b)Hong Kong Cable TV was granted an FTNS licence to provide telecommunications services over its hybrid fibre coaxial cable network. Its network rollout will pass 1,737,000 premises by end 2002, increasing substantially from 957,000 in end 1999. It plans to launch a cable modem service, which is a broadband service for the Internet, reaching 500 000 customers by end 2000 and 1.2 million customers by end 2002. Its capital investment would involve about HK$580 million;
(c)Twelve external satellite-based FTNS licences were also issued. These operators would increase Hong Kong’s external telecommunications capacity by 3 Gigabits per second (Gbps)in the next three years, involving a total investment of HK$770 million; and
(d)“Letters of Intent” (LOIs) were issued to thirteen cable-based FTNS applicants who meet the licensing criteria. The TA intends to issue to the LOI holders external cable-based FTNS licences upon their successful negotiations with other relevant parties and authorities on such matters as construction and maintenance and landing rights, and satisfactory commitments to performance bonds in guaranteeing major milestones. This flexible approach is adopted taking into account the unique circumstances cable-based operators face in investing in such highly capital intensive projects. The external telecommunications capacity of Hong Kong will increase significantlyby 384Gbps in the next three years, compared to our total capacity at 44 Gbpsat present, subject to finalisation of agreements with other parties and refinement arising from possible consolidation of the proposed cable systems by the applicants[Note]1. These projects involve an estimated total capital investment of about $9 billion in the telecommunications infrastructure related to Hong Kong in the first three years.
7.A list of the above successful applicants for the local fixed wireless FTNS and external FTNS licences is at Annex D. Details of the above licensing decisions are set out in the Legislative Council Briefs issued on 18 January 2000 and 1 February 2000, which are published at the websites of ITBB [ and OFTA [
Benefits to the Economy
8.The issue of new licences are major steps taken to liberalise progressively our telecommunications market. The new operators will enhance our telecommunications infrastructure by providing additional broadband networks and services, and will increase our external telecommunication capacity substantially. The increased competition in both the local and external telecommunications markets is expected to drive down prices, improve the quality of service, induce the introduction of more innovative services and increase consumer choice. These all help to ensure that Hong Kong will have an excellent telecommunications platform for sustainable growth in the Information Age.
Information Technology and Broadcasting Bureau
February 2000
Annex A
Criteria for Selection of Proposals for
Local Fixed Wireless FTNS Licences
1.Coverage of services
-number of buildings
-distribution of coverage
2.Financial soundness and commitment to investment in the proposed network and services
-financial soundness
-extent of committed investment
-business plan
-level of performance bond
3.Technical soundness and expected quality of service
4.Proven managerial and technical expertise
5.Technological innovation and services
6.Rapid development of the network and early introduction of service
-roll out plan
7.Quality of proposal
8.Benefits to the local telecommunications industry to customers in Hong Kong and to the economy as a whole
9.Corporate structure
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Annex B
Criteria for Selection of Proposals for
External FTNS Licences
1.Scale of investment
-capital investment
-extent of commitment
-business plan
-level of performance bond
2.Financial capability
3.Technical soundness and a satisfactory quality of service
-connectivity to places
-increase in capacity of external connectivity
4.Proven management and technical expertise
5.Service quality and charges
6.Implementation schedule
7.Quality of proposal
8.Benefits to the local telecommunication industry, to customer, to the economy as a whole
9.Corporate structure
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Annex C
Criteria for Evaluation of HKCTV's Application for
An FTNS Licence to Provide Telecommunication Services
over its Cable Television Network
1.Further rollout of network and return of MMDS frequencies
2.Provision of open access to Internet Services Providers and other service providers
3.Financial soundness and commitment to investment in the network and the proposed services
4.Technical soundness and a satisfactory quality of service
5.Proven managerial and technical expertise
6.Technological innovation and new services
7.Rapid development of the network and early introduction of services
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List of Successful Applicants
I.Local Wireless FTNS Licences
1.PSINet Hong Kong Limited
2.香港網絡拓展有限公司 (HKNet-Teligent Company Limited)
3.香港寬頻國際有限公司 (Hong Kong Broadband Network Limited)
4.裕基科技有限公司 (Eastar Technology Limited)
5.數碼通電訊有限公司 (SmarTone Mobile Communications Limited)
II.External Satellite-based FTNS Licences
1.Hutchison Telecommunications Technology Investment Ltd.
2.NTT Com Asia Ltd.
3.Pacific Century Matrix (HK) Ltd.
4.PSINet Hong Kong Limited
5.Teleglobe Hong Kong Ltd.
6.中國衛星寬頻網絡有限公司 (China Digital satNet Limited)
7.亞洲衛星有限公司 (Asia Satellite Telecommunications Co. Ltd.)
8. 城市電訊國際有限公司(CTI International Ltd.)
9.萬方科技有限公司 (Million Point Technology Ltd.)
10.遠東電信服務有限公司 (Far East Gateway Ltd.)
11.銀河衛星廣播有限公司(Galaxy Satellite Broadcasting Ltd.)
12.數碼通電訊有限公司 (SmarTone Mobile Communications Ltd.)
III.Letters of Intent for Cable-based EFTNS Licences
A. Eleven applicants who will be issued Letters of Intent to bring in new submarine cables(Note 1)
1.Asia Global Crossing Hong Kong Limited
2.AT&T Asia / Pacific Group Limited
3.BT (Hong Kong) Limited (英國電訊(香港))
4.CTI International Limited (城市電訊國際有限公司)
5.Far East Gateway Limited (遠東電信服務有限公司) (Note 3)
6.Flag Telecom Asia Limited
7.Global One Communications Limited (冠博通訊有限公司)
8.Level (3) Communications Limited
9.MCI WorldCom Asia Pacific Limited
10.NTT Com Asia Limited
11.PSINet Hong Kong Limited
B.Three applicants who will be issued Letters of Intent to bring in new land cables (Note 2)
1.CLP Telecommunications Limited (中電數碼有限公司)
2.Far East Gateway Limited (遠東電信服務有限公司) (Note 3)
3.Unicom International (HK) Limited (聯通國際通信(香港)有限公司)
Note 1 :The 11 successful applicants will bring in a total of 7 new submarine cables. The new cables will terminate in different points in Asia, such as Japan, Shantou (汕頭), Taiwan, and through these points connected to other international submarine cables. For example, the cables terminating in Japan may be connected to the US/Japan cable; the one terminating in Shantou (汕頭) may be connected to the US/China cable.
Note 2 :The 3 successful applicants will bring in 4 new land cables, all terminating in Shenzhen.
Note 3 :This applicant proposes to invest in both a new submarine and a new overland cable to and from Hong Kong.
[Note]Note 1The amount of investment and the increase in capacity are derived from the applicants’ proposals. Since the LOIs are not binding, the investment as well as capacity of the cables may be subject to change, depending on the business arrangement they finally adopt and negotiation with other overseas authorities.